Despite record number of vacancies in first quarter, analysts warn fallout from US subprime crisis will hit Hong Kong this year Economists and recruiters fear there will be a reduction in the number of jobs in Hong Kong this year. Despite record job advertisements posted in the first three months of this year, their concerns are based on the economic woes in the United States. Economists have warned that the US is headed for recession, which some say may be prolonged. Nevertheless, figures from the latest South China Morning Post/admanGo survey, which tracks job vacancies advertised in Hong Kong's six major recruitment publications on a monthly basis, showed that employers posted 76,111 job advertisements during the first quarter of this year. This was up 18 per cent from 64,459 during the same period last year, and the highest for a first quarter since the data was first tracked in 2004. Paul Tang Wing-shing, chief economist for the Bank of East Asia, attributed the growth in jobs to the strong domestic economy, and the fact that hiring usually lagged the rest of the market. 'Although the outlook for the United States market is not so good, and Hong Kong's export figures have been showing some slowdown, the domestic economic and the financial sector are still doing quite okay,' he said. 'Particularly if you look at retail sales. We are seeing strong double-digit growth. Consumer confidence remains quite good. I think there is a lot of demand for hiring. 'But I question whether this will persist going into the second half [of the year], because hiring in the export sector has slowed and everybody knows the US is going into a recession. I think because trade accounts for over 20 per cent of our economy, this is going to have an effect.' Matthew Bennett, director for recruitment firm Robert Walters in Hong Kong, said he believed that growth in job numbers came as multinationals set up offices in Asia to source products, leveraging on the relatively cheap prices and rising quality. He said most of the advertisements were likely to be new positions, as opposed to vacancies created from people switching jobs. Unlike last year, when the job market experienced a sudden jump in March, after companies paid out generous bonuses, he noted that there was less turmoil in the market this year. The SCMP/admanGo survey showed that, within the first quarter, jobs grew incrementally to a peak of 27,006 advertisements in March, from 26,642 and 22,463 in February and January respectively. Significant jumps in demand were witnessed in the hotel and catering, and trading sectors. Buoyed by record tourist visits and a stronger renminbi, the former posted 6,344 job advertisements in the first quarter of 2008, up 56 per cent from 4,069 during the same period last year. A strong export sector helped trading job advertisements to shoot up by 40 per cent, from 4,750 in the first three months of last year to 6,658 in the first quarter of this year. Riding on the back of a boom in the wealth sector, bank and finance job vacancies also grew by a generous 39 per cent, to 5,028 positions in the first quarter of this year from 3,629 during the same period in 2007. The other industries with the greatest demand for labour were manufacturing, where job advertisements edged down 6 per cent to 5,452, education, which grew by 11 per cent to 4,016 jobs in the first three months of 2008 from 3,621 during the comparable period last year, and clothing and fashion where demand dipped 9 per cent to 3,790 in the first quarter, compared to 4,171 during the same period last year. Of special interest is a 15 per cent decline in posts in the insurance sector, which was initially expected to experience growth, to 816 jobs, from 957 during the first quarter of 2007. There was a huge demand for engineers, surveyors and architects, where 6,955 vacancies were recorded in the first quarter, up 63 per cent from 4,269 during the same time in 2007. There was also a massive jump in retail servicing where demand for positions, such as waitresses, sales persons, tellers, and branch, shop or restaurant managers, surged by 51 per cent to 5,502 during the first quarter this year, compared to 3,638 during the same time in 2007. Modest gains, in the range of 10 per cent to 20 per cent, were also observed for most of the major corporate jobs such as accounting and finance, administration and clerical, customer service, human resources, management level executives, and marketing. The other major roles, such as merchandising and purchasing, and operations, edged up by low single digits. Despite the positive first quarter figures, Mr Bennett said he expected the trouble developing in the global economy to push full-year hiring numbers in Hong Kong down, compared with last year. 'The problem is that this was the first three months of the year, we didn't know we had all of these skeletons that have been coming out of the closet,' Mr Bennett said. 'Banks have been continuing to write down profits due to the subprime issues. The problem is that if the global market continues to suffer, people will have to take less risk, and incidentally there might be less money to invest in growing businesses outside the region you are currently in. 'Will things slow down? They probably will if things continue to go the way they have been, but I certainly don't think we are going to suffer nearly as much as the rest of the world.' Contrary to what most market watchers are predicting, Mr Bennett expects the trading sector to continue to grow, as cost-conscious US and European corporations continue to source products from Asia. The hotels and tourism sector should also continue its boom, provided the mainland's economy kept growing, he said. He also noted that while local and second-tier banks had continued to hire new staff, he expected that wealth managers and investment managers would compete for the wealth of individuals who were growing steadily more averse to risk. This was expected to dampen hiring in the financial services sector, he said. Dan Chavasse, managing director, Greater China and Southeast Asia for rival recruiter Michael Page International, said he expected job vacancy growth to be flat this year. Noting that the International Monetary Fund earlier this month had trimmed Hong Kong's forecast real GDP growth this year to 4.3 per cent, from its most recent projected figure of 4.7 per cent made in October, Terence Chong Tai-leung, associate professor of economics at the Chinese University of Hong Kong, said he expected job growth to slow down for the rest of the year, and for unemployment to increase slightly from the 3.3 per cent figure in February. 'There will still be growth, but it will be slower,' he said. 'This is because China is still growing relatively quickly, and our economy is closely linked with that. 'What is happening with the US will hurt prospects to an extent here, but its effects will be limited.' Dr Chong predicted that growth in the trading sector would come to a halt in the coming months as exports to the US, which was forecast to enter into two quarters of negative growth, slowed down. But, he speculated that there might still be room for growth in the financial services sector in Hong Kong as the city continued to develop its bond and nascent Islamic finance markets. He agreed that the tourism sector would continue to boom, helped along by the continuing expansion of Ocean Park.